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July 24, 2008--It would be so much easier to plan for retirement if you knew when you were going to die. You can’t know, but that shouldn’t stop you from asking: At what age do I think I'm going to die? Your answer can help you achieve success in your retirement planning.
I’ve been asking clients this question for years because I’ve discovered that encouraging people to ponder the imponderable can trigger life-changing conversations that help them make better financial choices.
There is a taboo in American culture about posing a question few people feel comfortable answering. Death is such an anxiety-producing subject that even otherwise sophisticated people with large estates avoid writing or updating their wills, often with disastrous results.
I begin working with clients by asking them to write their full name and the age at which they guess they will die. Then I ask them to write down the five things they wish they had been known for, had accomplished, had achieved, or been doing in the year before they died.
This exercise is often sobering, provoking people into converting secret fears into action so that the financial planning process can be geared toward making sure those five important things happen before they die.
Your state of mind is the hidden element in planning your retirement finances. If you have a lot of relatives and friends who died early, you may have internalized that you will die early too and make poor financial choices believing your time is short. But if you reach age 65 healthy and broke, you may become so despondent you’ll end up fulfilling your prophecy.
Those worried about living to be a hundred and running out of money should have a plan that comes as close as possible to guaranteeing they won’t end up impoverished. Then they can enjoy their retirement with peace of mind.
People should be thinking less about how much money they think they’ll need to live on and focus instead on exploring how their financial lives can help them achieve more of what they value with greater certainty.
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